Spotlight on economy: Auto dealers, manufacturers expected to see March springback

If the weather has been holding back the U.S. economy, we should get some concrete evidence on Tuesday. A key manufacturing index is forecast to rise slightly in March and auto sales are also expected to bounce back.

Sales of U.S. autos are projected to increase to a 15.8 million rate in March from 15.3 million in February, according to economists polled by MarketWatch. Auto sales were basically flat in the first two months of the year and unusually harsh weather has been blamed. Yet if ice and snow prevented customers from visiting showrooms in January and February, then somewhat warmer weather in March should boost sales close to the 16 million mark. Another soft sales gain would be seen as more worrisome.

Before auto sales are tallied up, the Institute for Supply Management will release its survey of executives on trends in the U.S. manufacturing sector. The index, released at 10 a.m. Eastern, is projected to edge up to 53.9% in March from 53.2% in February. Any number over 50% means more companies are seeing an expansion of business instead of a contraction.

While new orders and production could increase, some economists caution that a rise inventories due to slower first-quarter sales could act as a drag on the ISM index and limit any gain.

Also Tuesday, Markit will issue its final U.S. manufacturing reading for March. The flash or preliminary March index fell to 55.5 from 57.1 in February. Construction spending for February, meanwhile, is expected to drop 0.1% because of harsh winter weather that made it difficult for builders to get as much work done.